Resource Needs and Funding for Health Systems

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Resource Needs and Funding for Health Systems

• Professor Brook K. Baker
• Health GAP (Global Access Project)
• Northeastern U. School of Law,
• Program on Human Rights and the Global Economy
• Seminar Right to Health Challenges in
  Funding, Health Systems and Universal Access in
  Development Policies, Madrid, Spain
• June 2, 2010

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Outline of Presentation

• Current global health spending domestic health
  spending and development/donor assistance for
  health.
• Global health resource needs and financing gaps.
• Campaigning for adequate and sustained donor
  financing for health what should we be doing?

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Health Spending in Developing Countries with 92
of Global Disease Burden is Anemic

• 2004, global health spending 4.1 trillion
• 2003, dev. country health spending 410 billion
• World Bank Strategy for HNP Results 2007.
• 2005, health spending in SSA 27 billion.
• GHWA Education (2008).
• Out of pocket 70 in LICs
• 50 in African countries)

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Domestic Resources for HealthAbuja 15
Commitment New Revenues

• At the end of 2009, only six African countries
  had ever met their 2001 Abuja Declaration
  commitment to spend 15 of their budget on
  health.
• Countries must also pursue a job-growth and
  domestic revenue agenda
• Resource extraction fees
• Tax avoidance and capital flight
• Pro-growth, job-creation policies

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Would Meeting Abuja 15 Make a Difference?USAID
Roundtable (2008)
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Donor/Development Assistance for Health

• DAH estimates vary depending on what is included.
• Actual disbursements are generally significantly
  less than commitments.
• A large portion of DAH never hits the ground.

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Kaiser Estimates DAH 2001-2007
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DAH by Major Component
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2007 DAH by Sub-Sector (Kaiser 2009)
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Development Assistance for Health1990-2007
Lancet 2009 373 211324
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Allocation of ODA to Health Has Increased
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But, ODA has stagnated since 2005
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Increasing Donor Assistance for Health is
Essential

• Massive increases in external assistance are
  needed to finance MDG health goals.
• (WB, Health Financing Revisited 2006)
• Old estimates of resource needs (CMH World
  Bank) range between 25 billion and 70 billion
  in additional aid, per year, to meet MDG health
  goals. Ibid.
• 2009 estimates from the Task Force on Innovative
  Financing has calculated additional global health
  resource needs for LICs alone of 45 billion by
  2015.
• These estimates may be far low, esp. when all
  dev. countries are included.

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(No Transcript)
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How big is the gap?Who will pay?
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TOTAL DEVELOPING COUNTRY HEALTH RESOURCE NEEDS
AND GAP 2009-2015 (Baker, 2010)
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Recurrent Dilemmas in DAH

• Earmarks conditionalities.
• Only 20 to government budget support.
• Over 50 is off budget and not available to
  support the health system or to pay recurrent
  public sector costs staff, infrastructure,
  training, management, etc.
• Very high overhead costs, small percentage hits
  the ground
• Unpredictable, short-term and volatile.

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Recurrent Dilemmas in DAH

• Lack of coordination/harmonization.
• Tied aid and donor-provided technical assistance.
• Overhead losses.
• Corruption and inefficiency in recipient
  bureaucracies.

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Subadditionality

• Donor health aid is often fungible, meaning that
  countries can disinvest in health at the same
  time that donors are investing, usually as a
  result of IMF/ministry of finance macroeconomic
  restraint policies and misguided government
  spending priorities.

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IMF Macroeconomic Fundamentalism
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IMF Macroeconomic Fundamentalism
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Hydraulic Pressure ? Subadditionality

• On average, 37 of all additional aid was
  indirectly diverted to increase foreign currency
  reserves another 37 was diverted to reduce
  domestic debt only 27 was actually spent.
  Figure A2.9.

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Poorer, Weaker Countries Spent Even Less

• Good performers (low inflation, high reserves)
  spent 49, weak performers only 17.

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Poorer, Weaker Countries Spent Even Less

• Good performers (low inflation, high reserves)
  spent 49, weak performers only 17.

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Sub-Sub-Additionality

• New study shows that for every 1 of foreign aid,
  governments may have reduced their own spending,
  on average, by 1.14!
• Lu et al., Lancet (2010).
• An unpublished study finds a high correlation
  between subadditionality and IMF loans.

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Health Spending Faces Competition Food and Fuel
Shocks 2007-2008

• Food prices went up 83 from 2005-2008 and have
  remained high
• Oil increased over 300 2003-08 but has fallen
  back since
• Global food resource needs estimated between
  20-30 billion a year.
• These price shocks had adverse effects on
  imported inflation, government spending, and
  currency reserves

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Global Recession and Climate Control

• Current financial crisis lower remittances,
  fewer exports, eroded terms of trade, lower tax
  revenue increased debt, lowered reserves
• Climate control and mitigation resource needs -
  100 billion/year.
• Global Fund needs 20 billion 2011-2013
• PEPFAR flat-funded FY 2009-2011
• What are the prospects for increased resources
  for health?

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Campaigning for Global Health Funding

• Mobilizing and allocating domestic resources for
  health long overdue
• Donor achievement of .7 ODA, including .1 for
  health long overdue
• Innovative financing for health, esp. CTL/FTT for
  health an idea whose time has come.
• Attacking IMF macroeconomic constraints and
  achieving additionality long overdue